With EU leaders in Brussels coming to an agreement on Greece, Asian economies with foreign currency reserves are heaving a sigh of relief. The crisis could raise the profile of the yuan in the international arena, says Professor Joseph Cheng.
The debt crisis in Europe is a source of huge concern for Asia, since most of the emerging economies in East Asia and Japan are relatively dependant on foreign trade. That is the view of Joseph Cheng, a professor in the Political Science department at City University of Hong Kong. He told RT that in China’s case, foreign trade constitutes almost 65 percent of GDP, which puts the country under considerable pressure from the world economy.
Still, the professor believes the Asian economies could benefit from the euro crisis.
“Eastern countries in the long term certainly would like to have their currencies accepted as currencies for international trade settlements, especially Japan and China. They also want to have their currencies play a more significant role as international reserve currencies. So the weakness of the euro and, to some extent, the weakness of the US dollar, are perceived as opportunities,” explained Professor Cheng.
At the same time, China may be tempted to invest and acquire some EU debts, believes the professor, “in the first place to demonstrate its support for the EU, to cultivate goodwill and to demonstrate its status as a responsible stakeholder internationally.”
The current financial crisis is a major test for the EU, says Cheng. The union has always been perceived by other countries as a model of integration, and now it has to stand on its merits.